Pharmaceutical care is constantly evolving, with many novel drugs entering the market. These offer alternatives to existing treatments, and in some cases, the prospect of treating conditions previously considered incurable. However, the costs of new drugs can be very high, with significant implications for health care budgets. In 2017, retail pharmaceuticals accounted for almost one-fifth of all health care expenditure, and represented the third largest spending component in OECD countries after inpatient and outpatient care.

Pharmacists are trained health care professionals who manage the distribution of medicines to consumers/patients and help ensure their safe and efficacious use. Between 2000 and 2017, the density of practising pharmacists increased by 33% on average in OECD countries, to 83 pharmacists per 100 000 inhabitants (). The number of pharmacists per capita is highest in Japan (181 pharmacists per 100 000 people), and lowest in the Netherlands (21 pharmacists).

Pharmaceutical consumption has been increasing for decades, driven by a growing need for drugs to treat age-related and chronic diseases, and by changes in clinical practice. This section examines consumption of four categories of medicines: anti-hypertensives, cholesterol-lowering agents, anti-diabetics, and anti-depressants. These medicines address illnesses for which the prevalence has increased markedly across OECD countries in recent decades.

All OECD countries view generic and biosimilar markets as an opportunity to increase efficiency in pharmaceutical spending, but many do not fully exploit their potential. In 2017, generics accounted for more than three-quarters of the volume of pharmaceuticals sold in the United Kingdom, Chile, Germany and New Zealand, but less than one-quarter in Luxembourg and Switzerland (). Differences in market structures (notably the number of off-patent medicines) and prescribing practices explain some cross-country differences, but generic uptake also depends on policies (OECD, 2018[1]; Socha-Dietrich, James and Couffinhal, 2017[2]). In Austria, for example, generic substitution by pharmacists is still not allowed. In Luxembourg, generic substitution by pharmacists is set by law but is limited to selected medicines.

Pharmaceutical research and development (R&D) is funded from a complex mix of private and public sources. Governments mainly support basic and early-stage research through direct budget allocations, research grants, publicly owned research institutions and higher education institutions. The pharmaceutical industry is active across all phases of R&D but makes the largest contribution to translating and applying knowledge to develop products. Clinical trials required to gain market approval are largely funded by industry. However, industry also receives direct R&D subsidies or tax credits in many countries.